Good news, New Yorkers: You may no longer need $1 million to buy a middle-of-the-road Manhattan apartment.
But just barely.
Lest the financially average among us get too excited, the median price only fell to $999,000, dipping below $1 million in the last quarter of 2018, according to a report from Douglas Elliman.
It was the first time the median price fell below seven figures since crossing the million-dollar listing threshold in 2015. A report from another firm, Brown Harris Stevens, noted a similar decline but found the median apartment sale price to be $1,050,000.
Still, taken together, the end-of-the-year data in both reports suggested that New York City’s real estate market continued the gradual slowdown that had characterized it for most of the year.
“Across 2018, it was a market reset,” said Jonathan Miller, the real estate appraiser who prepared Douglas Elliman’s report. “We’re almost moving toward more normal conditions.”
The number of sales of Manhattan apartments also continued to decline, down more than 3 percent from the same period last year, according to the Elliman report. At the same time, the number of listings jumped by more than 12 percent.
The slowdown in the city has followed patterns emerging across the United States. Sales are declining across the country, driving down prices, Miller said. But the Manhattan apartment market has led the way.
“The New York metro area was one of the first to really see a downshift,” he said.
Purchases have slowed, especially at the top end of the market, after a boom in luxury condo construction left a glut of higher-end apartments that allowed buyers to be more discerning, Miller and Hall Willkie, the president of Brown Harris Stevens, said. At the same time, rising mortgage rates and uncertainty about the effect of changes to the federal tax laws made other buyers hesitant to buy expensive real estate in high-tax areas like New York.
“It’s a great market for buyers,” Willkie said. “Things are selling for less, there’s more inventory, and more people are having a hard time selling their apartments.”
As a result, he said, sellers were more open to negotiation.
Sellers were also becoming more realistic after years of what Miller and Willkie called “aspirational pricing.” As the luxury housing market boomed, a series of high-priced listings captured media attention and grabbed headlines. Some of those properties closed at record prices, but most of them did not, Miller said.
Still, units that sold for stratospheric prices had a psychological effect on other sellers, who saw the prices as bench marks to which they could aspire. That caused more sellers to reach for higher prices, increasing the gap between market value and asking prices.
That mentality took root across all levels of Manhattan’s apartment market, Miller said.
“I heard so many stories about, like, a tenement fourth-floor walk-up in the Lower East Side being overpriced” because of major luxury apartment purchases, Miller said. “There was like a really strange logic that sellers were using.”
Buyers eventually started to balk, and some properties lingered on the market, Willkie said. Once sellers began to adjust their mindsets, prices began to fall.
“Everyone was believing that real estate was going to be worth more tomorrow,” Willkie said. “And looking at property as an investment, rather than what residential real estate is: shelter.
“And if you don’t make a good decision about shelter,” he said, “you’re going to get wet the next time it rains.”